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As DMW Predicted – Redstone Fires Viacom CEO Freston

Authored by Jay Baage on September 5, 2006 - 8:28am.
I asked this question a week ago: Does Sumner Redstone have the Guts to fire New Viacom Head Tom Freston? We now know that the answer is yes.

DING. DING. DING. Soon after midnight an insider posted a comment on DMW related to my story on Freston last week: "I predict that you will get a lot of site visits today." Then early this morning the bomb hit the wires – Viacom executive chairman Sumner Redstone is giving Tom Freston the boot.

In a conference call Tuesday morning Redstone resonated the arguments I put forward in my story last week. Specifically, Freston had not been aggressive enough in his pursuit of acquisitions, and had failed to communicate his new media strategies to Wall Street, which had Viacom's stock significantly underperforming sibling rival CBS.

Redstone says that he is confident that the new executive duo of Philippe Dauman and Thomas Dooley will allow Viacom to "better navigate the digital transition", proving that the old man is much like his nemesis at News Corp., Rupert Murdoch, being all about digital media these days (at least in communications with Wall Street).

Redstone goes on to say that Dauman will be a "highly aggressive and entrepreneurial (CEO) who will let no opportunities pass and let no company ever beat us to the trophy," clearly referring to how News Corp. beat Viacom to the punch in acquiring the popular social networking website MySpace.com.

So, what is my spontaneous reaction this morning? Although I wrote last week that this was a necessary move on Redstone’s part, I was still surprised to see it happen so quickly.

Freston used to be considered to be the designated heir to the Redstone media throne (Redstone has had two right-hand men for a long time, one is CBS’s CEO Leslie Moonves and the other used to be Freston). That Redstone now fires his close friend and confidant for so many years shows you two things, business is business, and how important it has become for media executives to have a good grasp of digital media.

The leadership shift on top of MTV and New Viacom hopefully indicates a new creative vision for MTV, as well. Like I have pointed out so many times before (and the topic of my recent NYU Master’s Thesis "From The MTV Generation To The MySpace Generation – How The Audience is Shaping Television in the 21st Century") MTV desperately needs to reconnect with its core audience. Young people today no longer look to MTV to define what is cool and edgy, instead they go to MySpace, YouTube and a number of other smaller niche players (AKA “The Long Tail”). But it is not too late for MTV to reinvent itself into a new media powerhouse.

I was born in the 70's and grew up in the 80's and 90's with MTV and I really hope that they can bring back the kind of excitement and awe to the young audience today, that it brought me back then. Hopefully Philippe Dauman and Thomas Dooley can deliver on this. They just need to realize that even if they are the top executives at Viacom, they are not in control anymore. The viewers are. It is a new mindset and the new MTV has to be a bottom-up media company as opposed to a top-down pre-programmed television channel.

Imagine this, an MTV version of "Google Labs", located somewhere away from the MTV Times Square corporate headquarters. A place where new creative ideas in media can be fostered and grown. A new media version of Andy Warhol’s Factory, attracting top creative talent from around the world.

How cool would that be?


Related Links:
Does Sumner Redstone Have The Guts to Fire New Viacom's CEO?
http://tinyurl.com/n2mue (Bloomberg)
http://tinyurl.com/oodak (Reuters)
http://tinyurl.com/oerce (WSJ)
http://en.wikipedia.org/wiki/Tom_Freston
tags: Internet | Video | TV | Career | Moves | Investing | MTV | Viacom | Tom Freston |



Comments

DMW - Investigative Insight

Submitted by DMW Fan (not verified) on September 5, 2006 - 9:09am.
Way to go DMW! Good analysis!

The viewers are in control...not exactly.

Submitted by Bob Jacobson (not verified) on September 5, 2006 - 11:24am.
The new saw that "the viewers (or users) are in control" is the latest incarnation of one-man, one-vote, boosting a supposed online democracy that, like its political counterpart, doesn't quite work. Internet users, including viewers of online media, are able to exercise choice only among the offerings on systems provided to them by media companies large and small. And those companies are not very imaginative, always trying to please risk-adverse investors. The users aren't inventing their own online systems. So what we see online is lots more "home video," because that's the level of sophistication for which the medium was designed. Right now according to the press and the blogosphere, the Big Three hot categories of online services are: 1. Social networks (dare I say MySpace, a terrifically unsocial online experience?) 2. File-exhibition (like YouTube, Flickr, etc.) 3. Wikis (e.g., Wikipedia, the Wiki Paradise) Then there are the popular follow-up categories, like tic-tac-toe on your desktop. There's not a lot of inspiration or imagination demonstrated by any of these services (although Wikipedia is a great update of the encyclopedia, the service closest to being democratic). If Redstone is serious about getting digital media right, and Dauman and Dooley are inspired, Viacom won't replicate yet another of the multitude of services in the categories above, none of which would be profitable if it weren't for good old advertising. It will invent better. People use the existing systems to do what they do because they exist. They'd use better and do better if better were available. This is an historic opportunity for invention at Viacom, on the order of Thomas Edison. Get out and see what people are doing and more importantly, WHAT THEY'RE NOT DOING, BUT WANT TO, and then build to fit. To find out what they want to do will require a different team mission and makeup than one finds at studios, broadcasters, and cable TV companies, who are used to telling, not asking. Is Viacom up to it? Wouldn't it be great!

My website, Total Experience

Submitted by Bob Jacobson (not verified) on September 5, 2006 - 11:31am.
For anyone who wants to contact me for further discussion, my website is Total Experience, a member of the Corante.com community of online business-related blogs. A link there will send email to me.

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